Triguboff lending around $200 million to Chinese buyers to tide over their funding crisis

Harry Triguboff, Australia’s biggest apartment developer, is financing about $200 million mostly Chinese buyers of his apartments as China imposes tougher currency controls to get money out of the country.

Triguboff, the owner of developer Meriton Group, said his company didn’t lend until two years before, but with Australian banks tightening lending to Chinese investors and China making it harder to take out money, financing became an option.

"Now, [I'm lending] maybe $200 million. It might go up to $400 [million]. But then they will start paying back. This is the worst time. What's happening is I don't have old customers, so nobody's paying me back. So I'm building it up. In another year, they'll start paying me back,” Triguboff told the Australian Financial Review in an interview.

Despite saying he was "unfortunately" lending to his customers, it is something Triguboff, who topped the BRW Rich List for the first time last year with an estimated fortune worth $10.62 billion, can afford. Meriton's balance sheet is strong enough to extend finance to its customers. 

“I don’t want to be a banker, but I have to be one if our banks won’t lend,” he said a while back.

Apartment prices are also weakening, he said.

"Now, if anything, it's going down a bit," Triguboff said. "It went up in the beginning of the year. Now it's gone down."

He expects to make $1.4 billion worth of apartment sales this year.

Apartment values in Sydney fell 1.2 percent in April while in Melbourne, they were down 0.9 percent, CoreLogic figures show. Meriton develops in NSW and Queensland but not in Victoria. 

Just last year, Tribugoff was worried that Chinese investors leaving the market would trigger a 10 per cent fall in Sydney apartment prices, which might have even blown out to a 20 per cent fall. 

Triguboff had predicted more buyers to forfeit their deposits and fail to ­settle off-the-plan units due to funding constraints, both as China clamped down on taking money out of the country and Australian banks tightened lending to overseas investors.

"The Chinese government is making it hard for them. That is the biggest problem,” he told the AFR.

But recently, the Chinese have started coming back as they think the Chinese government would start to ease the control towards the end of the year, fuelling optimism among investors.

Recently, Meriton raised his off-the-plan development prices up 3.5 per cent without seeing demand fall. 

Overseas Chinese are now snapping up some 50 per cent of Meriton apartments sold off the plan. Australian-born Chinese are taking around 25 per cent and Australian investors/first homebuyers are taking about 25 per cent, according to a recent article in The Australian.